Among the most significant transformations that India has witnessed over the past decade, the growth of the startup ecosystem is one of the prominent ones. As of 30th June 2024, there are 140803 startup enterprises in India which are recognized by DPIIT (Department for Promotion of Industry and Internal Trade). This increase in the number of new business ventures in India from 450 in 2016 to 140803 in 2024 is driven by technological advancements, a favorable business environment, skilled workers and supportive government policies, positioning India in the third position among the largest startup ecosystems across the world.
Not only in technology, nowadays, these new establishments are driving innovations and revolution in every sector, contributing to the economic growth of India in terms of generating employment opportunities and fostering the culture of entrepreneurship. Considering the current trends, it is forecasted that the Indian entrepreneurship ecosystem is all set to witness an economic annual growth of 12 to 15 per cent in the coming years.
The current scenario of the startup ecosystem in India
The ecosystem for entrepreneurship in India has been excelling in the past few years. The funding for new business ventures in India in 2023 was valued at around 11.3 billion US dollars. Instead of depending on traditional jobs for career growth, a majority of today’s younger generation, especially Gen Z and Gen Y, are showing greater interest in starting their own business by leveraging their passion, entrepreneurial skills and innovative mindsets, resulting in the growth of new business ventures. In this regard, there are currently more than 5000 angel investors, 100 unicorns and 1200 mentorship programs accountable for identifying the potential customers, partners and investors for facilitating entrepreneurship in India.
As per the Indian government, a startup refers to an enterprise which has an annual turnover of less than one billion Indian rupees, is less than ten years old and has headquarters within India. Technology, e-commerce and fintech have been proven as the top-performing business sectors where these types of companies have thrived in 2023. It has been reported that among 806 districts of India, these new small business ventures are found to be operated in more than 670 districts.
Hyderabad, Chennai, Pune and Bengaluru are some prominent cities where the prevalence of talent hubs and venture capitalists is high. For new entrepreneurs, these regions become the most attractive to run their business because of the availability of advanced infrastructure, access to the best talents as well as access to the required raw materials within reasonable costs.
Contribution of startups towards the growth of the Indian economy
According to a report, the newly started business ventures were accountable for the generation of 20 to 25 per cent employment opportunities in India in the past decade, while it has the potential to generate 50 million new jobs in India by 2029-30. As of 2023, the GDP of India is valued at around 3.57 trillion US dollars, which is most likely to touch 7 trillion US dollars by 2030. In this regard, according to the forecast, the new business ventures can contribute around 1 trillion US dollars to the Indian economy by the financial year of 2029-30.
However, there is a major role of Unicorns in this economic growth and job creation. Unicorns refer to those newly started business ventures which have a market value of 1 billion US dollars or more. The new employment opportunities will not only include direct jobs, but there will also be jobs for gig workers as well as suppliers. Moreover, foreign investment also facilitates the growth of small business ventures in India, contributing towards the country’s economic development.
Various programs of the Indian government to encourage entrepreneurship
Startup India program
The major objective of introducing this initiative on 16th January 2016 is to facilitate the entrepreneurs to grow by developing a favourable ecosystem and to push India to become a nation of job creators rather than job seekers. This scheme aims to support the new businesses in terms of facilitating self certification to simply the regulations and offering relaxations on compliance. Apart from this, this initiative intends to help entrepreneurs connect with potential investors for the funding requirements as well as arrange mentorship programs for them from industry experts and leaders.
Atal Innovation Mission (AIM)
The aim of this initiative is to build a culture of innovation, problem-solving and entrepreneurship in India through the offering of supportive platforms, and designing creative programmes. Under this initiative, 10000 Atal Tinkering Labs have been established, where students are empowered to be involved in hands-on practices to foster innovation, while 72 Atal Incubation Centres (AIC) have been founded to promote new business ventures and entrepreneurship. Till now, AIM has supported more than 3500 ventures in India, among which more than 1000 were led by women.
Creating Strides Across Nations! 🌎
Training & Workshop sessions have been organised by Giz and AIM for Agri-business Women Entrepreneurs from Malawi in India. It is a part of Triangular Cooperation of India, Germany and Malawi aimed at promoting Women entrepreneurs. pic.twitter.com/coj9YeiP9O
— Atal Innovation Mission Official (@AIMtoInnovate) September 17, 2024Startup India Seed Fund Scheme (SISFS)
Despite having creative business ideas, entrepreneurs are often found to be struggling to arrange the required initial funding, which often restricts the idea from being implemented in the practical field. In this regard, SISFS is accountable for offering financial support to entrepreneurs of up to Rs 10 crore by the authorised incubators. Till now, SISFS has provided funding to more than 200 new business ventures worth around Rs 613.17 crores in total to make the implementation of innovative ideas most successful.
Credit Guarantee Scheme for Startups (CGSS)
CGSS scheme makes it easier for entrepreneurs to access credit for their businesses. The applicants can get up to Rs 5 crore loans from the participating banks through this scheme to address the financial content to initiate their business venture. More than 7300 ventures have obtained benefits from this scheme through which a total of more than Rs 29500 crore has been sanctioned to the applicants. Apart from getting credit, they also benefit in terms of getting access to facilities like longer repayment periods and decreased interest rates. The loans which can be obtained with the help of this scheme are working capital loans, term loans as well as purchase order financing.
FAQ
What are the primary factors driving the growth of India’s entrepreneurship ecosystem?
The growth of India’s entrepreneurship ecosystem is primarily fueled by technological advancements, a favourable business environment, a skilled workforce, and supportive government policies.
How is small entrepreneurship contributing to India’s economic growth?
Small entrepreneurship is playing a significant role in India’s economic growth by generating employment opportunities, fostering entrepreneurship, and driving innovation across various sectors. They are estimated to contribute around 1 trillion US dollars to the Indian economy by 2029-30.
Which sectors are leading the growth of new business ventures in India?
Technology, e-commerce, and fintech have emerged as the top-performing sectors for new business ventures in India.
What government programs are supporting the growth of entrepreneurship in India?
The Indian government has implemented several programs to encourage entrepreneurship, including Startup India, Atal Innovation Mission, Startup India Seed Fund Scheme, and Credit Guarantee Scheme for Startups.
